NEW DELHI —
In India, the government says it will focus on infrastructure development and on boosting investment as it proposes a slew of measures to propel the economy on a high growth path.
Saying that the government last year inherited an economy dominated by “doom and gloom," Finance Minister Arun Jaitley pointed to the dramatically changed scenario nine months on.
Presenting the country’s annual budget Saturday, he said growth is strong, inflation is down and foreign exchange reserves are high.
“The credibility of the Indian economy has been re-established. The world is predicting that it is India’s chance to fly,” he said.
Jaitley added the government will increase spending on roads, ports and power plants by $ 11.3 billion.
“The major slippage in the last decade has been on the infrastructure front. Our infrastructure does not match our growth ambitions. There is a pressing need to increase public investment,” he said.
The government also announced measures to encourage investment and reduce business bottlenecks. These include an unprecedented corporate tax cut from 30 percent to 25 percent over the next four years.
The finance minister said the government will meet its fiscal deficit target of 4.1 percent, but will delay by a year its goal of cutting it to 3 percent.
In a country where millions of people are still poor, the government did not slash the country’s huge fuel and food subsidies, which economists say drag down the economy. But it has promised to make them more efficient and reduce corruption.
The government also proposed measures to create a social security system that would give all Indians access to subsidized insurance and pensions.
The government expects the economy to grow at 8 to 8.5 percent in the next fiscal year.
However, the country’s chief economist, Arvind Subramanian, has cautioned that these numbers should be interpreted with caution.
“The balance of evidence shows that India is still a recovering economy, not a surging economy that can be thought of as a tiger as yet,” said Subramanian.
The government hopes to restore high growth by making India a sought-after business destination and attracting investment. While the business environment has improved, investors say sweeping measures to overhaul the economy have not yet happened.